US dealerships sales rise but profits stay flat image

Although the recovery in the US auto market was thoroughly set throughout the industry, the country’s 17,665 new-car dealers saw their profits unchanged, due to increased competition.

Across 2013, the earnings margins across the US dealerships remained the same as in 2012, at an average of 2.2%. The figure, according to the National Automobile Dealers Association, which made the report, is for both new and used car deliveries and also auto parts and service sales.

“Fierce price competition — whether from online research, a network of competing franchised dealers or compelling new vehicles — continues to dominate an industry with slim retailing margins,” said Steven Szakaly, chief economist at the association. “The economic recovery is continuing, and we expect a stronger housing market, improving job prospects and continued low interest rates for auto loans to boost sales this year,” he added.

For the industry, new car sales in the US in 2013 grew 7.6% over 2012, for a total of 15.6 million units. This year, total sales are only up 3% so far over the same period in 2013, because of the very harsh winter. Still, in April the sales grew 8%, which gives hopes the tally would further increase over the course of the remaining months. In 2013, total revenue at dealerships across the United States also went up 8.8% to $730 billion.